Warren Buffett called Facebook an extraordinary business — but ruled out buying its stock
- Warren Buffett praised Facebook, now known as Meta, as an exceptional business.
- The Berkshire Hathaway CEO ruled out buying a stake because of the company's unclear future.
Warren Buffett has repeatedly praised Facebook, now known as Meta, as a fantastic business. Yet the famed investor and Berkshire Hathaway CEO has essentially ruled out buying its stock.
"We've always known that the dream business is the one that takes very little capital and grows a lot," Buffett said during Berkshire's annual meeting last year. "Apple and Google and Microsoft and Facebook are terrific examples of that."
Buffett lauded Meta, which owns WhatsApp and Instagram, as an "extraordinary business" during a CNBC interview in 2012. However, he noted that exceptional companies are the trickiest ones to value, and he was too unsure about how Meta would fare over the next five or 10 years to invest in it.
"It's much easier for me to figure out what Coca-Cola is worth than Google or Facebook," Buffett said. "I'm not saying they have anything but brilliant futures, but I just don't know."
Buffett famously tries to operate within his "circle of competence," only investing when he has deep knowledge of a business and its industry.
He was asked in 2012 whether he would buy a large stake in Facebook if Mark Zuckerberg, Meta's CEO and cofounder, thoroughly explained the social-media group's operations to him.
"Probably not," Buffett replied. "I just don't understand it well enough."
The Berkshire boss and his business partner, Charlie Munger, have raised some concerns about Facebook over the years.
In a 2018 interview, Buffett called out the platform's influence on the US presidential election in 2016, and the risk of it being used to suppress votes. Similarly, Munger bemoaned politicians' use of the social network in "flogging angry idiots to the polls."
"I don't invest in what I don't understand, and I don't want to understand Facebook," Munger said in a CNN interview in 2012.
"I don't want people putting all this personal stuff into a permanent record when they are 15 years of age," he continued. "I think it's counterproductive. I just basically don't like it."